Software Engineering: Six-Sigma Finanacial Tool Interest Subsiding…

“Six Sigma”, the engineering tool used to rein in financial costs while improving related processes, is, as reported in the BusinessWeek article below, experiencing a decrease in interest by corporate management. Though not normally associated with software engineering processes, it tends to be in large companies the receptacle for which such metric-based data is used to calculate costs and their associated benefits… or lack of.

Nonetheless, management cadres that have been using this once highly popular process improvement methodology are beginning to report that its strict concentration on the financial aspects of a corporation are beginning to cause more harm than good to the innovative side of things.

However, to be honest, there is no large company any place that can be considered “innovative” by any stretch of the imagination beyond their advertising and except, of course, in the imaginations of those who are running things. For example, it has come to light by pharmaceutical analysts that there hasn’t been a single truly “innovative” drug produced by the US drug industry in two decades.

Yet, to take this slightly further, one recent corporate observer has bluntly stated that current corporate innovation is usually restricted to the amazing purveyance of political scheming that can be accomplished for the upward mobility of the ambitious. Whatever real innovation a large corporation in the United States does introduce is more than likely to have originated with the Pentagon research and development agencies.

This, of course does not hold true for the small and medium-sized firms in the United States, since they live and die by the innovative offerings they can bring to the marketplace. And such tools as “Six Sigma” would most likely destroy these smaller company infrastructures than help them.

In any event, large companies are beginning to find that such tools as “Six Sigma” do an excellent job in controlling costs but do little to motivate the company to provide incentive towards true innovative thinking. Such a result would hold true no matter what process improvement tool was being used since innovation and high quality in organizations that require innovative approaches, such as in IT and engineering for example, simply cannot be reduced to financials, though most upper echelon management would prefer it this way.

“Six Sigma” and other such tools tend to dehumanize the process to nothing more than metric- based data which quantifies the actual results of any specific effort. And if not carefully implemented, innovative thought is simply eliminated because such tools, despite earlier successes attempt to produce assembly-line indoctrination into the most critical of corporate processes. That is why smaller firms rarely require such tools and as a result inherently produce innovation by the nature of their own infrastructures. Though to be fair, not all smaller firms have innovative thinking as part of their daily operational processes… and these companies eventually disappear. However, large corporations are inculcated with a culture of conformity which gives support to such tools being implemented which in turn reinforce the expectations of such commonality. Instead of using their brains, corporate management instead can avail themselves of such tools to do the hard work for them… and still they screw up.

Despite the current enormous profits of major corporations and trans-nationals in recent years, there is very little to really promote them as sources of innovation. As most serious analysts would concur, many such companies produce nothing but the processing of overseas manufacturing which has lowered quality of many products over time while at the same time proportionately increased their costs. The result is, existing corporations are simply over-developed money-machines which are attempting to find better ways of surviving in an environment where innovation is a key component to successful competition that is being forced upon them by smaller US firms and the emerging industries of the developing world.

Companies that tout their existence of numerous generations of existence should be a clear warning sign to investors and workers that aside from this once daunted characteristic which was a symbol of quality it is now nothing more than an indication of entities in their declining years leaving their historical importance as so much baggage. In fact, according to a 1998 study done by the Oxford Saïd Business School, most large corporations have been showing the signs of decline for many years as their continued activity demonstrates parallels with the large companies at the turn of the 20th century in 1900. The study concluded that by 2020 many of these behemoths will be long gone as more nimble and credible organizations emerge. And in recent months, BusinessWeek has also reported on such an inclination.

As it relates to the enhancement of IT efficiency and quality there is in reality very little need for such tools which have created their own industries and subsequently their own marketing\propaganda strategies as a result. Instead, common sense which can be easily found in such books as the 1996 acclaimed project management classic, “Rapid Development” by Steve McConnell, will provide more than enough information for those technical managers looking to enhance their organizations. This book is still being purchased quite regularly and as a result is still in its original 1st edition printing. For those looking for more information beyond this text, there are plenty to choose from. However, interestingly enough, most such writers will be found to have supported McConnell’s contentions and principals or have corroborated them.

This posting is open for comments…

Steve Naidamast
Black Falcon Software, Inc.



Six Sigma: So Yesterday?
Click title for source & Problems at 3M Coreporation at BusinessWeek.com…

By Brian Hindo in New York, with Brian Grow in Atlanta

In an innovation economy, it’s no longer a cure-all

At Home Depot (HD ), ousted Chief Executive Robert Nardelli was devoted to Six Sigma. “Facts are friendly” was a favorite mantra of his, neatly summing up his managerial point of view. Six Sigma was used to streamline the check-out process and strategically place vacuum-cleaner displays, for example. But by-products of the program irritated many at the retailer’s stores, who thought its constant data measurement and paperwork sapped time given to customers. The bottom line on Nardelli’s tenure: Profitability soared, but worker morale drooped, and so did consumer sentiment. Home Depot dropped from first to worst among major retailers on the American Customer Satisfaction Index in 2005.

Now Nardelli’s successor, Frank Blake, another General Electric (GE ) alumnus, is dialing back on the Six Sigma rigor, giving more leeway to store managers to make decisions on their own. The story unfolding at Home Depot echoes closely what’s happening at 3M after James McNerney’s reign. There are signs of a similar pullback at many companies, even at GE, where CEO Jeff Immelt is trying to reprogram his management ranks to innovate around a theme of “ecomagination,” with mixed success. And at Young & Rubicam, where GE board member Ann Fudge flamed out as CEO after she tried to sell ad execs on Six Sigma.

So has the Six Sigma moment passed? “I think it has,” says Babson College management professor Tom Davenport. “Process management is a good thing. But I think it always has to be leavened a bit with a focus on innovation and [customer relationships].” The discipline was developed as a systematic way to improve quality, but the reason it caught fire was its effectiveness in cutting costs and improving profitability. That makes it a powerful tool—if those are a company’s goals. But as innovation becomes the cause du jour, companies are increasingly confronting the side effects of a Six Sigma culture.

Six Sigma clearly had a profound impact on the corporate world. According to the American Society for Quality, 82 of the 100 largest companies in the U.S. have embraced it. And that’s quickly trickling down: Six Sigma consultants are as busy as ever as the quality-improvement system migrates from its traditional focus on U.S. manufacturing companies to the financial-services industry and abroad. In recent years, companies as varied as DuPont (DD ), Textron (TXT ), Bank of America (BAC ), and Sun Microsystems (SUNW ) have all made Six Sigma bedrocks of their culture. Hybrid formulas have spawned, such as Lean Six Sigma and Design for Six Sigma. WCBF, an organization that organizes conferences about the process, has 14 events planned this year, up from seven last year.

But as its popularity endures, the notion of Six Sigma as a corporate cure-all is subsiding. Once a company has done the requisite belt-tightening, “the strategic needs of a business change,” says Robert Carter, a consultant at defense contractor Raytheon (RTN ). Kick-starting the top line becomes paramount; the best way there apart from an acquisition is innovation. At Raytheon, Carter is leading a Six Sigma effort to promote innovation. But while “most Six Sigma practitioners are very strong on the left brain, innovation very much starts in the right hemisphere,” says Carter. Even he, a Six Sigma expert, acknowledges the “define, measure, analyze, improve, control” mind-set doesn’t entirely gel with the fuzzy front-end of invention. When an idea starts germinating, Carter says, “you don’t want to overanalyze it,” which can happen in a traditional DMAIC framework.

Of course, Jack Welch has argued that a leader needs to single-mindedly inculcate Six Sigma into every corner of an organization. Should a CEO hedge and say, “Let’s do both Six Sigma and also be creative,” employees will tune out the part they don’t want to hear. Welch has said that even if the concept is applied in areas where perhaps it shouldn’t be, it’ll be worth it in the long run. It can always be fine-tuned once the workforce gets it. Call it the break-some-eggs-to-make-an-omelette approach.

Problem is, you don’t know which eggs you’re going to break. When Steve Bennett left GE in 2000 to take the CEO post at software maker Intuit (INTU ), he was eager to roll out Six Sigma. But he did it gingerly, pilot-testing the quality-improvement tool in certain groups for a year to prove its worth. He was unsure of how a Silicon Valley company would react, given its associations with Six Sigma—”most of them bad,” he says. So he cloaked the move under the benign-sounding banner of “process excellence,” deliberately avoiding using the name Six Sigma. Says Bennett, “The term gives me an allergic reaction.”